A Newcastle city centre pub is set to be transformed after developers pledged to plough up to £500,000 into a refurbishment programme, creating 20 new jobs.

The Malhotra Group Plc, which runs leisure, care and property divisions, acquired The Market Lane six years ago, as part of a series of key property purchases across Tyneside, and has waited until the time was right to carry out a makeover.

The popular public house has been serving pints for more than 150 years and is affectionately known as the Monkey bar.

In Victorian times it was a popular watering venue for the Irish bricklayers who helped build much of Victorian Newcastle and legend has it that they used to leave their hods - which were known as ‘monkeys’ - in the passageway as security against their bar tab – giving the venue its nickname.

Now the venue is set to double in size when developers carry out a two-phase transformation, creating new areas including a function room, two outdoor terraces and a restaurant.

But they have vowed to maintain the buildings traditional charm – including its jukebox – to make sure its loyal army of customers, as well as newcomers, enjoy its expanded look.

A listed building application has been sent to Newcastle City Council asking for permission to make a series of alterations and renovations, which would also see the developers take over the adjoining, empty part of the Grade II Listed property, to create new areas and restore a former banqueting hall to its former glory.

Interior designers Collective Design, which has been responsible for a number of city centre bar refurbishments in recent years, is working with the firm on the project.

Atul Malhotra, operations director for the Malhotra Group, said: “The investment in Market Lane reflects its continued popularity. The site will retain its traditional pub feel, which we know our loyal customers will appreciate.

“We’ve had the site for some time but have sat on it while that part of town has come to fruition.

“The plans see us go up into two upper floors as well as a back area, creating a function room that can be hired, and the beauty of the plans are that we won’t lose the traditional feel of the place.

“2015 was a record-breaking year for Market Lane in terms of sales which were over 25% up on the previous year, so we don’t want to lose the customers who come four, maybe five or six times a week, who have contributed to its success, so it will be very much a traditional pub with a modern style.

“We’re looking to introduce a private dining area and function area and a restaurant area for 40 to 50 covers.

“Upstairs we will have an outdoor terrace which will look into the downstairs terrace.

“And downstairs we also want to attract in people during the day, by creating a continental cafe area up until 5pm, where people can pop in for a coffee or bite to eat, similar to the cafes you see in Italy or France.”

The whole programme will unfold in two phases this year, with the first one covering the downstairs area being completed by summer, subject to planning approval. The second phase will then get under way and be finished by the end of the year.

Mr Malhotra added: “Market Lane will remain open while the work is going on – it will take time but I don’t want to close for one day.”

Records show that the public house has been run by a long list of landlords since 1801, originally under the name The Butcher’s Hotel and various other names before it became the New Market Lane in the 1830s.